Which pension plan will teachers choose?

There must be many state policymakers across the land who
feel trapped between the fiscal reality that their teacher retirement systems
are teetering under huge deficits that only continue
to grow and the political perception that teachers are determined to keep their
defined benefit pensions.

But is that really how all teachers feel? A new study from Dan Goldhaber and Cyrus
Grout adds to the growing evidence that many teachers
are quite open to other types of pension plans.
Goldhaber and Grout look at data from Washington state, where teachers
have been able to choose between a traditional defined benefit plan and a hybrid
plan that combines a defined benefit component with a defined contribution component.

The study looks at two cohorts of teachers. In the first cohort, 75 percent of teachers
elected to move from the DB plan to the hybrid. Some context is required, though; the state offered a significant financial incentive
in the form of a transfer bonus. But the
study looks at a second cohort of teachers: new teachers who have had to
choose between the two plans since 2007, without any incentives on the
table. A full 60 percent of these teachers--52 percent by election, the rest by default--are in the hybrid plan.

So take heed and take heart, state policymakers. Teachers are more open to these changes than
you think. And there's more: Goldhaber and Grout found some evidence that
the more effective teachers were more likely to pick the hybrid plan.